Purchasers — whether they are end-users or speculators — are entirely at the mercy of vendors.
Kashgar borders on the Taklimakan Desert and the Uygur name means a "gathering of boulders". It is located at one of the oldest and richest oases in the southwest of Xinjiang province, near the borders of Pakistan, Uzbekistan, Kyrgyzstan and Afghanistan.
Once an important gateway on the fabled Silk Road to Samarkand, Kashgar is now home to the Uygurs and has been earmarked by the central government for economic development along the lines of a new Shenzhen.
Under the plan an 8.5-square-kilometre economic development zone will be created, offering tax incentives to lure direct foreign investment targeting trade with Kashgar's neighbours, a latter-day re-engineering of its Silk Road history.
The transformation of Shenzhen, the nation's first special economic zone initiated by the late paramount leader Deng Xiaoping, turned a sleepy fishing village into a thriving industrial, financial and technological hub over 30 years.
Average home prices in Shenzhen, now home to 14 million people, are around 30,000 yuan (RM13,987) per square metre, up from 5,500 yuan in 1999, and some see the same story unfolding in Kashgar — hence the buying interest despite the risks.
"I think the opportunities are greater than the risks," said Jay Ji, a Korean engineer who hopped on a 4½-hour flight to Urumqi, from Shanghai. From Urumqi he took another 90-minute flight to Kashgar in search of what he called a "dream investment".
In Kashgar he was escorted by a local property agent who picked him up from the airport. After a two-day search Ji bought a 120 sqmetre apartment at Hai Jing Hua Ting on Liberation Road for 510,000 yuan, or 4,320 yuan per square metre.
He bought it off-plan and construction on the project, billed to become the tallest residential block in the city, has yet to start.
But despite the risks, Ji decided to make the investment after learning of the central government's aims to transform Kashgar into the mainland's next Shenzhen, where, he said, home prices had shot up more than fivefold in the past 11 years.
"It was a bit expensive," mused Ji, who speaks fluent Putonghua. "Prices were just 2,500 yuan per square metre a year ago. But there aren't many choices in the city centre because most new projects have been sold.
After getting a discount of 50 yuan per square metre, he agreed to buy a unit on the top floor of the 21-storey building, trusting the information contained in a one-page leaflet that consisted of a primitive illustration and a brief description of the location and floor plan of the project.
The leaflet offered no hint about a completion date.
"The site is still a big hole," said Ji, though he said he was not worried about whether the developer would complete the project, nor was he worried about potential political instability.
Security has been tight in Kashgar, known as a hotbed of unrest for years, after bloody clashes between Han Chinese and Uygurs in Urumqi, the regional capital of Xinjiang, claimed nearly 200 lives and injured 2,000 on July 5 last year.
Military vehicles patrol day and night around the mainly Uygur city and troops guard the People's Park in the city centre at night.
"I won't use the flat anyway. It's an investment property and I'll sell it if property prices double in the next two to three years. If not, losing 500,000 yuan is not big money for me," Ji said.
Such optimism is typical among buyers, who have already driven Kashgar prices higher. This year alone, property prices in Kashgar have doubled to 4,000 yuan per square metre and in contrast to discounting now taking place in many major cities, Kashgar developers keep revising their prices upwards.
The South China Morning Post visited four new projects around the city between July 23 and July 25, and found that sales staff were far more relaxed and confident than their counterparts in Hong Kong.
"Average prices will rise from 3,620 yuan per square metre to 3,730 yuan two days from now. A quarter of the 400 units have been sold and we will hold the remaining units from sale from next week," said Deng Xiaoying, a saleswoman at Hai Jing Hua Ting's site office.
"You have to be quick if you want to buy the whole block? It is a good location and nearly 90 per cent of our units are being bought by Han Chinese," Deng said. "We have to remind you that those projects offering at lower prices may be in areas dominated by Uygurs. Resale value will be affected because buyers from Shanghai, Wenzhou and Shenzhen who can afford to pay higher prices prefer locations where the majority are Han Chinese."
Having said that, residential projects catering for Uygurs are also sought-after and the serviced apartment-retail project, Ya Wa Ge Hua Yuan, built in Uygur ethnic architectural style will be offered for sale shortly.
Hesenjan, a Uygur sales representative of the project, said the development would comprise 430 serviced apartments and retail shops, and had registered more than 700 potential buyers so far.
In the first half of this year, 300,000 sqmetres of Kashgar residential properties have been sold, compared with 400,000 sqmetres for the whole of last year.
Meanwhile backers of Beijing's call for financial support for Xinjiang, are reported to be ready to pour more than 10 billion yuan into the biggest and most comprehensive investment in the western autonomous region to date. During a three-day Kashgar Trade Fair that ended on July 2, private businessmen from Guangdong, Shenzhen, Shanghai and Shandong committed to investing in 256 projects worth a total of 28 billion yuan.
The projects range from real estate, mining, agricultural products processing, tourism and logistics.
Beijing hopes the new policy can help reduce poverty, create job opportunities and help Uygurs to get rich — and hopefully alleviate discontent and social unrest.
Timing entry into the market is crucial, as Lu Yongmou, a 25-year-old Han Chinese, discovered.
In June this year Lu signed an agreement with Foshan Electrical and Lighting (FSL) as its first franchisee in the city. The two parties each invested 500,000 yuan to open a 100 sqmetre store to sell FSL lighting bulbs to government departments and offices.
Within a month Lu's investment cost had soared. "Retail rents have doubled from earlier this year. If I opened this store earlier I would have saved about 100,000 yuan," Lu said.
Rents have risen to 50 yuan per square metre currently from 20 yuan in January, he said.
Zheng Jinhuo, general secretary of Xinjiang Guangdong Enterprises Association, said he planned to build a shopping centre in Kashgar. But rising land prices forced him and his partner to consider other alternatives.
Land prices in the city were 200,000 yuan per mu (about 2.4 hectares) before the inter-ethnic violence in Urumqi last year, he said. "Now, you cannot buy for less than one million yuan per mu. The market is too hot," he said.
He and two friends decided instead to build a centre selling construction materials in Hetian, about 800 kilometres from Kashgar. Hetian land prices were less than 100,000 yuan per mu.
When Hainan Island was declared a special economic zone in 1988, property price rises were fuelled by rampant speculation.
"Similar things are happening in Kashgar now. Such blind buyers will get burnt severely once the property bubble bursts," Zheng said.
But Zhang Jun, a deputy director of Hengchang Zhongtian Real Estate Development, a major Guangdong-funded developer in Kashgar, rejected suggestions that the market was overheating.
"Many people can afford to buy homes at current price levels," he said, citing the example of the 4,000-unit European View Garden where 1,000 units were launched for sale in October last year at prices ranging from 130,000 yuan to 330,000 yuan each.
Phase one had already seen 988 units sold, he said, and with 70 per cent mortgage loans from banks, home buyers could enter the market with a 30 per cent initial deposit of as low as 39,000 yuan.
But average price for the soon-to-be launched second phase of 1,000 units would increase by 30 per cent to 3,000 yuan per square metre.
Zhang, 46, said his firm paid 250,000 yuan per mu for the site in May last year, two months before the deadly riots in Urumqi. The whole project will require a total investment of 900 million yuan.
"The positive news [of speeding the economic development in Kashgar] has boosted land prices in prime areas to between 700,000 yuan to one million yuan per mu," he said.
Based on current land prices, he expects average home prices in Kashgar could rise to as high as 5,000 yuan per square metre over the next five years.
But locals like 26-year-old taxi driver Abul Alim, who earns 1,000 yuan a month, are concerned about being pushed out of the market by soaring prices.
"Businessmen and tourists are starting to return but not yet on a big scale. There is no way we can catch up with soaring home prices," he told the Post. — South China Morning Post
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